US stocks opened higher on Wednesday as semiconductor shares rallied following strong earnings from South Korean chipmaker SK Hynix, while investors awaited the Federal Reserve’s interest-rate decision and quarterly results from major technology companies.
The S&P 500 rose 0.24%, while the Nasdaq Composite gained 0.33%.
The Dow Jones Industrial Average was up by 46 points.
Investors are assessing whether demand for artificial intelligence infrastructure can sustain the recent recovery in technology stocks, following concerns about rising borrowing costs and the returns on substantial AI investments.
Chip stocks rise after SK Hynix reports strong results
Semiconductor and data-storage stocks advanced in trading after SK Hynix reported a more than sevenfold increase in quarterly profit, exceeding analyst expectations.
The South Korean company’s US-listed shares climbed 10%.
Micron Technology rose 5%, while SanDisk gained 5.3%.
Seagate Technology fell 5.3% even after reporting an earnings beat in its first-quarter results.
Other chipmakers also moved higher.
Nvidia gained 0.4%, while Advanced Micro Devices and Marvell Technology rose 1.1% and 2% respectively. Arm Holdings advanced 0.8%, while Intel also recorded gains in trading.
Alphabet shares rose more than 1.22% following a media report that OpenAI planned to purchase Google’s artificial intelligence chips.
The Nasdaq Composite has gained around 2% so far this week, recovering after a difficult first half of October.
The rebound has been supported by renewed interest in AI-related stocks following Anthropic’s disclosure of its initial public offering filing.
However, questions remain about the sustainability of technology companies’ capital expenditure plans, particularly as higher borrowing costs raise concerns about debt-funded investments.
Microsoft and Alphabet earnings in focus
Investors will turn their attention to Microsoft and Alphabet after the market closes on Wednesday.
Both companies are expected to report accelerating cloud revenue growth, making their results important indicators of demand for AI computing services.
Markets will also examine their capital expenditure forecasts to assess whether spending on data centres and related infrastructure is translating into stronger revenue.
Amazon and Intel are among the other major technology companies scheduled to report later in the week.
Elsewhere, digital infrastructure provider Vertiv surged 12% after raising its full-year revenue and profit forecasts and reporting better-than-expected third-quarter results.
Robinhood Markets fell 4.4% after missing Wall Street estimates for third-quarter profit, while Visa declined 0.56% following its latest quarterly results.
Federal Reserve decision and inflation data awaited
The Federal Reserve is scheduled to announce its interest-rate decision at 2 p.m. ET on Wednesday, concluding its two-day policy meeting.
Markets widely expect policymakers to leave the federal funds target range unchanged at 3.75% to 4%, following September’s quarter-point increase.
According to CME’s FedWatch tool, traders see approximately a 90% probability of rates remaining unchanged.
However, expectations for further tightening persist, with LSEG data indicating that markets are pricing in at least three additional quarter-point increases by late 2027.
Investors will examine the Fed’s statement and Chair Kevin Warsh’s comments for indications of its future policy direction.
The September Personal Consumption Expenditures inflation report, due Thursday, will provide another measure of price pressures.
Third-quarter US gross domestic product data is also scheduled for release this week, with growth expected to reach 3.2%.
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